Press release from: 28 March 2012

SMARTRAC reports fiscal year 2011 results: Satisfactory business development under the given circumstances

  • Business development in fiscal year 2011 characterized by mixed market conditions and affected by the consequences of the severe flood in Thailand
  • Sales 2011: EUR 168 million, representing a decrease of 7 percent compared with EUR 180 million reported in 2010
  • EBITDA 2011: EUR 15 million compared with EUR 20 million in 2010, profitability at 9 percent EBITDA margin
  • Acquisitions conducted at the end of 2011 to accelerate further growth of SMARTRAC in the coming years. Customers to benefit from broader product, technology, and IP range combined with global R&D, sales, and production network
  • Balance sheet 2011: Equity decreased by 14 percent to EUR 139 million compared to EUR 162 million in 2010, equity ratio at 53 percent (2010: 65 percent)
  • Outlook 2012: Group sales expected to grow to some EUR 250 million in 2012, improvement of EBITDA profitability targeted
  • Dr. Christian Fischer, CEO: “The severe flood in Thailand was a great challenge for our company, the local team, and our customers. We are very pleased that we have managed this challenge successfully. This incident has shown us more than anything else that this company is truly one team standing together and fighting for the success of this company and the benefit of our customers.”

SMARTRAC N.V., a leading developer, manufacturer and supplier of RFID transponders and inlays, today announces financial figures for the fiscal year 2011. SMARTRAC considers the business development in 2011 as satisfactory under the given circumstances. In 2011, SMARTRAC experienced mixed market conditions, continued working on the setup and optimization of structures and processes within the Group, had to cope with the most severe flood in Thailand for decades, and conducted several acquisitions. Each individual factor posed challenges to the organization which the company in total managed successfully. Key topics of the 2011 business development:

Experiencing Mixed Market Conditions

SMARTRAC started the year with the clear knowledge that the exceptionally strong market upturn of 2010 would diminish to a certain extent. In the first half of 2011, market growth and order entry returned to a more moderate level than in the preceding year, yet still showed positive development. The slowdown of growth particularly in the card inlay related business segments continued over the course of the second half-year and came off deeper than anticipated which led to a temporary underutilization of the company’s card inlay production capacities. A very positive business development in 2011 was achieved in the Tickets & Labels Business Unit. Sales in the Tickets & Labels Business Unit increased by 80 percent in 2011 compared with 2010 based on the positive development in established markets as well as from new project wins and the vast demand in the retail and apparel application field. Order entry in the eID and Industry & Logistics business units developed positively but moderately.

The overall business development in 2011 was, however, significantly burdened by the severe flood in Thailand with its adverse effects on overall production capacity. Due to the effects of the flood and the weaker demand in certain business segments over the course of the year which could not counterbalance the negative effects of the flood, SMARTRAC was not able to achieve the sales target set for the full year 2011. Revenue declined by 7 percent from EUR 180 million in fiscal year 2010 to EUR 168 million in 2011. All in all, the business development of SMARTRAC in 2011 was satisfactory under the given circumstances.

Improving Excellence

Based on the stable but moderate demand in the worldwide RFID industry which SMARTRAC experienced during the first months of 2011, the company returned to a much steadier pace of operations than in 2010. Therefore, the Management was able to focus its attention on strategic projects and again turn its attention to the excellence project that was launched in 2009 and focusses on improving structures and processes in order to leverage untapped efficiency potentials. This project was put on hold in 2010 due to the exceptional market dynamics which challenged the organization in terms of keeping pace with the huge order entry and steadily and significantly expanding the manufacturing capacity. In 2011, the project was revived and the company continued working on the optimization of structures and processes. A restructuring program at the core production facilities in Thailand was started and the initiated measures achieved very encouraging initial successes in August and September 2011. These successes were, however, abruptly disrupted by the flood disaster which ravaged Thailand in October 2011.

Coping with the Flood Disaster in Thailand

On October 6, 2011, SMARTRAC was forced to evacuate employees and production equipment due to the most severe flood the region had seen in 70 years. Whereas it initially looked like the flooding would spare the Hi-Tech industry park and the company’s production facilities, SMARTRAC finally had to cope with the fact that the main floors of the company’s production facilities were flooded up to approximately 2.5 meters at the peak. The upper floors however remained waterless.

SMARTRAC maintains appropriate insurance coverage for damages to buildings, machinery, stock, and business interruption in Thailand and has already received initial payments from all insurance companies.

The force majeure event was and still is a great challenge for the company, its employees, and customers. From an overall perspective, the company is of the opinion that it managed the flood disaster much better than most of the companies in the region. Only two months after the flood, SMARTRAC restarted production in Thailand on December 9, 2011. In addition, the competent management of the preventive measures, the evacuation, and the recovery measures, also increased customers’ trust in the company.

Despite this severe incident, SMARTRAC’s commitment to the production location Thailand remains unchanged. The company has used the force majeure event in Thailand to revise its disaster recovery plans and set the prerequisites to be even better prepared for future challenges whenever and wherever they may occur.

Materializing the Company’s Growth Strategy

Over the past years, it has been the Management’s declared strategy to grow both organically and via select acquisitions. In 2011, SMARTRAC was able to acquire some of the leading players in their respective fields.

On December 8, 2011, SMARTRAC signed an agreement with Tenedora de Empresas S.A. de C.V. (Tenedora), regarding the acquisition of Neology, Inc., a leader in electronic vehicle registration (EVR), and electronic toll collection and public safety markets. Under the agreement, Tenedora will continue to be a shareholder of Neology and Neology will continue its business under their existing company name and brand.

On December 14, 2011, SMARTRAC acquired former KSW Microtec AG (KSW), a manufacturer of RFID inlays, pre-laminates, and components for the access control, e-payment, e-Ticketing, and asset management application fields as well as for high-security products for government identification documents based in Dresden, Germany. As part of the integration into the SMARTRAC Group, KSW changed its company name to SMARTRAC TECHNOLOGY Dresden GmbH.

On December 22, 2011, SMARTRAC reached an agreement with UPM-Kymmene Corporation (UPM) under which SMARTRAC will take over UPM’s RFID business while UPM-Kymmene Corporation will become an indirect stockholder of SMARTRAC. UPM RFID is a leading supplier of passive RFID products, specializing in the development and high-volume production of HF, NFC, and UHF RFID tags and inlays for use in a broad range of RFID applications. The transaction is still subject to certain customary closing conditions, including regulatory approvals, and is expected to be completed within the first quarter of 2012.

The SMARTRAC Management is fully convinced that the acquisitions will prove beneficial for employees, customers, business partners, and other stakeholders of the company and that SMARTRAC will be a much stronger company after completion of the transactions and integration projects. The acquisitions will not only strengthen the company’s product portfolio, manufacturing capacity, research & development capabilities, technology base, Intellectual Property (IP), patent portfolio, global sales force, and global footprint, they are also considered as an opportunity to build up the best team in the RFID-industry based on the unique ‘SMARTRAC spirit’.

Financial year 2011

The severe flood disaster in Thailand had significant adverse effects on overall production capacity of the company in the fourth quarter of 2011. Despite the growth in the first nine months of 2011, SMARTRAC reported a decrease of 7 percent and achieved Group sales of EUR 168 million in the 2011 fiscal year compared to EUR 180 million in 2010.

Sales in the Security Segment decreased by 14 percent and amounted to EUR 117 million in 2011 compared to EUR 136 million in 2010. Sales in the Industry segment accounted for EUR 50 million in 2011 representing an increase of 17 percent compared to sales of EUR 43 million in 2010. Growth resulted from the stable demand in the automotive business, additional projects in the non-automotive business as well as the significant increase of sales in the tickets and labels business.

EBITDA for 2011, as per definition, excludes extraordinary costs for the restructuring program in Thailand implemented in July and August 2011, extraordinary costs related to the flood in Thailand, as well as extraordinary acquisition costs. In total, Group EBITDA decreased by 23 percent to EUR 15 million, compared with EUR 20 million in 2010. Facing severe capacity reduction in the fourth quarter of 2011, the EBITDA margin amounted to 9 percent in 2011, compared with 11 percent a year ago.



In the 2011 fiscal year, the Security Segment reported EBITDA of EUR 13 million compared to EBITDA of EUR 17 million achieved in 2010. This represents a decrease of 22 percent. The EBITDA margin of 11 percent (2010: 12 percent) was mainly burdened by the lower production capacity and sales caused by the flood disaster in Thailand.

The Industry Segment accounted for EBITDA of EUR 3 million and thus further increased compared to EBITDA of EUR 2 million reported in 2010. The EBITDA margin of 5 percent (2010: 5 percent) is still below the potential of this segment. With the continued growth of the segment and the resulting economies of scale, the SMARTRAC Management is confident that the profitability of the Industry segment will increase further.

Loss for the period, including non-controlling interests, amounted to EUR 42 million, compared with profit for the period of EUR 6 million in 2010. This development mainly results from the extraordinary depreciation and amortization on property, plant and equipment as well as on inventory from the flood disaster in Thailand amounting to EUR 31 million, subsequent profitability effects from temporarily lost production capacity as well as from negative effects triggered by the financial result.

Whereas the effects from the flood significantly affected the company’s net profit in 2011, payments from insurance coverage will have a reverse positive effect on the net profit of SMARTRAC in 2012.

Balance Sheet

As of December 31, 2011, total assets on the consolidated balance sheet amounted to EUR 264 million, representing an increase of 6 percent compared to the previous year’s figure of EUR 248 million. This increase mainly resulted from the net effect of the increase in intangible assets and property, plant and equipment related to the acquisitions conducted at the end of 2011 and the adverse effects from the flood in Thailand.

The decrease of 14 percent in total equity to a total of EUR 139 million (2010: EUR 162 million) primarily resulted from the loss incurred in 2011. Consequently, the retained earnings decreased from EUR 55 million in 2010 to EUR 13 million in 2011. As of December 31, 2011, SMARTRAC held no treasury stock. The equity ratio decreased from 65 percent at the end of 2010 to 53 percent as of the 2011 reporting date.

Cash Flow Statement

Due to the effects of the flood disaster, the cash flow statement of 2011 cannot really be compared to the cash flow statement in 2010. Net cash provided by operating activities amounted to EUR 6 million in 2011, compared to EUR 2 million in the previous year, despite a net loss of EUR 42 million in 2011. Impairments on property, plant and equipment as well as on inventory at an amount of EUR 27 million did not impact the cash position of SMARTRAC in 2011.

As a result of the acquisitions conducted in 2011, net cash used in investing activities increased from EUR 19 million in 2010 to EUR 59 million in 2011. In particular, net cash outflow on business combinations increased from EUR 2 million in 2010 to EUR 40 million in 2011. Net cash provided by financing activities amounted to EUR 25 million in 2011 compared to net cash provided of EUR 28 million in 2010. The main financing was provided by shareholders through an equity contribution of EUR 15 million in 2011.

In total, cash and cash equivalents and bank overdrafts decreased by 56 percent to EUR 22 million (2010: EUR 49 million) as of December 31, 2011, and related mainly to the net cash used in investing activities.

As of December 31, 2011, SMARTRAC employed a total workforce of 3,676 people compared to 3,488 employees at the end of 2010.

Business Outlook

Despite the weaker demandin certain application fields experienced in 2011, the RFID industry is and will continue to be a market with strong growth potential. Therefore, the SMARTRAC Management Board is committed to steady and robust growth of the company and to create value for employees, shareholders, customers, business partners, and the company itself.

For the 2012 fiscal year, the SMARTRAC Management Board is confident to be able to achieve growth and an improvement in the company’s profitability. SMARTRAC Group sales are expected to grow to some EUR 250 million in 2012. In terms of profitability, the SMARTRAC Management will work hard to move on from the adverse effects of the flood disaster in Thailand and to achieve Group EBITDA margins which come close to past levels in the second half of 2012.

“In 2011, we have successfully overcome the severe flood disaster in Thailand while at the same time laying the foundation for future growth through select acquisitions,” said Dr. Christian Fischer. “Each individual factor poses challenges to organizations and employees. Successfully managing the coincidence of all of them is a clear sign of the strength of this company and our global team. Therefore, we are looking forward to a continued positive business development with growth in terms of sales and market share.”

The SMARTRAC 2011 Annual Report has been published today and is available for download on the company’s website at The 2011 financial statements will be presented to the Annual General Meeting of Shareholders in Amsterdam on June 19, 2012 for adoption. KPMG ACCOUNTANTS N.V. issued an unqualified auditor´s report in relation to the financial statements 2011.


SMARTRAC is a leading developer, manufacturer, and supplier of RFID components for a broad bandwidth of applications in all current frequency standards. The company produces ready-made as well as customized transponders and inlays for public transport, access control, RFID-based car immobilizers, animal identification, libraries, industry, and logistics.

SMARTRAC is the global market leader in high-quality RFID inlays for electronic passports (e-Passports) and contactless credit cards (e-Payment) as well as for RFID transponders for public transport applications. SMARTRAC was founded in 2000, went public in July 2006, and trades as a stock corporation under Dutch law with its registered headquarters in Amsterdam. The company currently employs approximately 3,600 employees and maintains a global research and development, production, and sales network.

If you have any questions, please contact:
Tanja Moehler
Head of Corporate Communications & Marketing
Phone: +31 20 30 50 157

Forward-looking statements:

To the extent that this press release contains forward-looking statements, such statements are based on assumptions, planning and forecasts at the time of publication of this press release. Forward-looking statements always involve uncertainties. Business and economic risks and developments, the conduct of competitors, political decisions and other factors may cause the actual results to be materially different from the assumptions, planning and forecasts at the time of publication of this press release. Therefore, SMARTRAC N.V. does not assume any responsibility relating to forward-looking statements contained in this press release. Furthermore, SMARTRAC N.V. does not assume any obligation to update the forward-looking statements contained in this press release.

Go back